2 excellent ASX 200 blue chip shares to buy

There are some really good S&P/ASX 200 Index (ASX:XJO) shares that could be worth investing in, like Bapcor Ltd (ASX:BAP).
The post 2 excellent ASX 200 blue chip shares to buy appeared first on The Motley Fool Australia. –

Some S&P/ASX 200 Index (ASX: XJO) blue chip shares are excellent and might be worth thinking about for your portfolio.

When you can find a business that’s quite defensive during recessions, and demonstrating good growth during normal times, then that could be a really attractive long-term investment.

These two ASX 200 blue chip shares could be excellent ideas:

Xero Limited (ASX: XRO)

Xero is building a reputation as a world leader in the cloud accounting space. It has close to 3 million subscribers spread across numerous countries including New Zealand, Australia, the UK, the USA, South Africa and Singapore.

The business is heavily focused on long-term growth, rather than short-term profitability. Management believe this will drive the most value for shareholders. After a period of cautious spending during COVID-19, Xero is getting back to expectations for total operating expenses to be 80% to 85% of operating revenue in FY22.

That spending is on things like product development and marketing. The Xero product is why it has subscribers, so it should try to ensure it has the best product that keeps getting better. Marketing is what brings new subscribers. Those new subscribers are coming with a long lifetime expectation, so it adds value to the business and gives the ASX 200 share further operating leverage.

Xero has been finding bolt-on acquisitions that it expects to add value, faster, for subscribers and improve the Xero offering. Those acquisitions were Planday, Tickstar and Waddle.

Management believe that small businesses will be a major driver of economic recovery in a post-pandemic world. This is Xero’s main client base. But even during downturns, businesses need to keep doing their bookkeeping and tax returns so that the ATO knows about their profit (or less) position, wages and so on.

Bapcor Ltd (ASX: BAP)

Bapcor is Australasia’s biggest auto parts business. Not only is it the market leader in Australia and New Zealand, but it also now owns 25% of a leader in Asia. Tye Soon is a Singapore-listed auto parts business that has operations in several Asian countries.

In a normal recession, Bapcor might be able to expect elevated levels of demand due to people trying to extend the life of their vehicle if a part breaks by replacing that part, rather than buying a new vehicle.

COVID-19 has been a particularly strange recession because there has been elevated levels of second hand car sales as well as very strong retail sales at Autobarn.

Burson is really driving profit higher. It’s demonstrating all the growth you could want – same store sales increasing, more Bursons opened and profit margins increasing.

A promising area of future growth for Bapcor is that Burson is starting a network in Thailand. After that, there may be more Asian countries on the horizon for Burson to grow into.

Asia is a huge region with a very large population. Bapcor is well-placed to grow its profit domestically with an ever-expanding network as well as growing earnings from Asia. According to Commsec, the Bapcor share price is valued at 20x FY22’s estimated earnings.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

More reading

ASX 200 up 0.95%: Qantas update, Nufarm’s profits surge

Morgans picks ASX stocks with upcoming “buy” catalysts

5 things to watch on the ASX 200 on Thursday

ASX 200 sinks, EML plunges, Appen soars

What does zero wage growth mean for the ASX 200?

The post 2 excellent ASX 200 blue chip shares to buy appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!